DIPAK RATNABHAI PATEL V. THE INCOME TAX OFFICER WARD 1(3)(6)

SCA/20608/2018

AI Insights

The case revolves around a writ application filed by Dipak Ratnabhai Patel challenging a notice issued by the Income Tax Officer for the assessment year 2011-12. The notice was intended to reopen the assessment on grounds that the partnership firm, M/s. Vijya Laxmi Exports, claimed an excess deduction under Section 10AA of the Income Tax Act, 1961. The petitioner argued that the reopening was based on conjectures and surmises, referencing a similar case where the court had restrained the respondents from passing the final order without prior permission of the court. The court, referencing its earlier judgment in a similar case, quashed the notice, finding it to be unjustified.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 681292 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 20-01-2021
• Assessment Year: misc
• Other Referred Cases: Vijya Laxmi Exports in Special Civil Application No.20132 of 2018, Special Civil Application No. 20607 of 2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: KALPANAK RAVAL
• Assessee Lawyers: VAIBHAVI PARIKH
• Keywords: Excess Deduction; Impugned notice; Income chargeable to tax has escaped assessment; Quash and set aside; Stay the implementation; Reopen the assessment
• Section: 148; 10AA

Judgement Text

"C/SCA/20608/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 20608 of 2018 ========================================================= = DIPAK RATNABHAI PATEL Versus THE INCOME TAX OFFICER WARD 1(3)(6) ========================================================== Appearance: MS VAIBHAVI K PARIKH(3238) for the Petitioner(s) No. 1 MRS KALPANAK RAVAL(1046) for the Respondent(s) No. 1 ========================================================== CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALA and HONOURABLE MR. JUSTICE ILESH J. VORA Date : 20/01/2021 ORAL ORDER (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1. By this writ application under Article 226 of the Constitution of India, the writ applicant has prayed for the following reliefs: “(a) quash and set aside the impugned notice at ANNEXURE “A” to this petition; (b) pending the admission, hearing and final disposal of this petition, to stay the implementation and operation of the notice at ANNEXURE “A” to this petition and stay the further proceedings for the asst. Year 2011­ 12.” 2. On 26.12.2018, the co­ordinate Bench of this Court passed the following order: “1. Mr.Tushar Hemani, learned advocate for the petitioner has invited the attention of the Court to the order dated 20.12.2018 passed by this Court in the case of Vijya Laxmi Exports in Special Civil Application No.20132 of 2018 to submit that in the case of the partnership firm also, the Assessing Officer sought to reopen the assessment on the ground that the firm had claimed excess deduction of Page 1 of 3 C/SCA/20608/2018 ORDER Rs.57,71,499/­ under Section 10AA of the Income Tax Act, 1961 which was liable to be taxed in the hands of the partners. It was pointed out that in that case the court has issued notice and has restrained the respondents from passing the final order. 2. Referring to the reasons recorded, it was submitted that in the case of the partners, the Assessing Officer seeks to reopen the assessment on the ground that M/s.Vijya Laxmi Exports has paid Rs.12,74,351/­ as interest on partners capital and Rs.44,97,148/­ as remuneration to its partners but has claimed excess deduction of Rs.57,71,499/­ under section 10AA of the Act. Reference was made to the computation of total income of Vijya Laxmi Exports to point out that interest and remuneration therein is shown as nil, which is also reflected in clause (g) in column No.17 in the statement of particular required to be furnished under Section 44AB of the Act. It was submitted that therefore, the Assessing Officer seeks to reopen the assessment on the basis of conjectures and surmises and that on the reasons recorded, the Assesing Officer could not have formed the belief that income chargeable to tax has escaped assessment. 3. Having regard to the submission advanced by the learned counsel for the petitioner, Issue Notice returnable on 5th February, 2019. By way of ad­interim relief, the respondent is permitted to proceed further pursuant to the impugned notice; he, however, shall not pass the final order without the prior permission of this Court. Direct service is permitted today.” 3. We take notice of the fact that one of the partners of the very same partnership firm namely M/s. Vijya Laxmi Exports had come before this Court by filing the Special Civil Application No. 20607 of 2018 challenging the notice issued under Section 148 of the Act, 1961. For the reasons recorded in the judgment delivered by this Court dated 07.01.2021, the Special Civil Application No.20607 of 2018 came to be allowed and the impugned notice was Page 2 of 3 C/SCA/20608/2018 ORDER ordered to be quashed. 4. For the very same reasons as assigned in the judgment rendered in the case of Co­partner, this writ application succeeds and is hereby allowed. The impugned notice dated 31.03.2018 is hereby quashed. (J. B. PARDIWALA, J) (ILESH J. VORA,J) SUCHIT Page 3 of 3 "